Paving the way for carbon pricing with green alternatives

06/17/2024 - The political success of climate change mitigation in Europe will depend on how well policy design enables consumers to switch from fossil fuels to clean green energy sources, researchers from the Potsdam Institute for Climate Impact Research PIK and Nobel Laureate Joseph Stiglitz argue. To accept carbon pricing, citizens desire viable alternatives to fossil-fuel based options, the authors of a new Comment published in Nature Climate Change write. They suggest a new argument for how to understand the public’s response to carbon pricing and how to ensure successful climate policy.

Support for carbon pricing in the European transport and building sector is highest when the revenues are re-invested in green measures such as climate-friendly building renovations, write Franziska Funke and Linus Mattauch from PIK, together with Nobel Laureate Joseph Stiglitz and colleagues from the University of Amsterdam and the French Centre National de la Recherche Scientifique. Combining green investments with targeted transfers to the most vulnerable is also supported by a majority.

The team of researchers asked 2,251 citizens from France, Spain and Germany about their views on the forthcoming second emissions trading system for road transport and heating and the newly planned Social Climate Fund, a measure to redistribute carbon pricing revenues within the EU. Both measures will become effective from 2027 on.

The researchers situate these findings in the context of the access barriers that consumers often face for switching towards green alternatives. As living costs and the costs for financing new climate-friendly appliances have risen, people are primarily interested in the range of options available when facing a carbon price. Rather than simply having to pay up and limit their driving and heating, citizens desire policies that enable them to switch, for example from a car with a combustion engine to an electric vehicle or public transport, the researchers say. Additionally, policy-makers should take even more care to target subsidies for clean energy consumer devices and loans for housing renovations to low-income households, the scientists conclude. This should help to reach people who could else face a price hike with no viable option to change their energy use.